There are many things to consider when buying crypto with a credit card. Such as, if you can or cannot buy cryptocurrencies like Bitcoin with a credit card, if the bank account you have allows such a transaction, the various fees involved that you have to pay when using credit cards to make crypto purchases, as well as the debt risk involved with using a credit card as a payment method to make a crypto investment. There is also a risk of having your account blocked due to the transaction being registered as risky by many banks - but in this article, we will explain them all.
Personal finance has come a long way since the days of banks being our only way to handle and approach the financial world. Today, using credit cards to make crypto purchases is pretty common. It is safe and legal to buy crypto with a credit card, but this is subject to question by regulators and speakers who consider this risky and maybe not the most sensible when it comes to personal finance.
Amongst all of these things to think about is the reality that it is not as straightforward as purchasing crypto through a bank account, a direct bank transfer, or a debit card, but a process to ensure a would-be purchaser is secure in their transaction. Creditors want to ensure they can afford to pay the money back and also is in an understanding of the incurring fees to pay to make it work.
If you are interested in buying crypto like Bitcoin or other crypto with a credit card, here are some key things you have to consider.
Can I buy cryptocurrency with my credit card?
The short answer is yes, you can buy cryptocurrency with a credit or debit card on the same day from a lot of crypto exchanges - it just depends on how, when, and the regulations that uphold the transactions. Some of the most popular exchanges allow their users to purchase crypto with credit or debit cards. However, each cryptocurrency exchange and bank has its own stipulations that must be abided by when it comes to regulating cryptocurrency and purchasing them.
You should check if the crypto exchange accepts Mastercard or only Visa in credit or debit card purchases. You should also check the fees involved with purchasing through these methods, with credit and debit cards often incurring trading fees that vary depending on the banks, method, and crypto exchanges involved. Nevertheless, a lot of credit issuers can see such an investment as a negative or simply a cash advance - blocking these transactions due to the uncertainty surrounding the investment, considering the poor regulation of the market, and also the ever-changing cash equivalence of crypto prices that may not pay back out.
Can you purchase crypto with credit?
Purchasing crypto directly with credit is not possible in the way receiving a loan is dependent on credit and the likelihood of it being paid back on time. Instead, crypto can be bought through credit cards, and it will be processed as if it was lending money for a risky investment.
Some credit card companies will allow you to purchase crypto without even informing you of the purchase's nature. As it is a high-risk, high-reward investment, some creditors will allow you to make a purchase using your credit card information and record it as a high-risk investment and cash advance, like with American Express.
What fees will I be expected to pay?
When using a credit card to purchase cryptocurrency, there are usually several fees and limitations to be aware of:
Cash Advance? Or Crypto Purchase?: Firstly, some cards may classify the purchase as a cash advance, resulting in an additional fee of $10 or 5% (whichever is greater). This fee is in addition to any fees charged by the vendor or exchange.
Annual Percentage Rate: Most cards have a higher Annual Percentage Rate (APR) for cash advances, often over 25%, and interest begins accruing immediately.
No Reward Qualification: Since these are registered as cash advances, purchases made for cryptocurrency typically do not qualify for rewards or bonuses and may have lower credit limits than the overall credit limit for the card.
These factors should be considered before using a credit card to purchase cryptocurrency. It should be noted that these instances of fees are not the same all across the board, some companies may not have any extra fees at all.
What is the best way to buy crypto with a credit card?
When buying cryptocurrency with a credit card, the process can vary slightly depending on the platform, but here are the typical steps involved:
- Register your account or log in. If you're a new user, you may need to complete an identity verification process before you can start buying crypto.
- Choose the cryptocurrency you want to buy. Select the specific coin you want to invest in and decide on your purchase amount. Also, ensure that you can buy that particular coin using a credit card.
- Select a credit card as your payment method and fill out your credit card number. However, you may need to complete a credit card verification process before finalising your purchase and adding it to your crypto wallet.
- Note that in some cases, this verification process can take several days before you can use your credit card to buy crypto.
- Some crypto exchanges allow you to use a method like Apple Pay, or Bank Transfers, ensuring your funds and credit card details are safe by avoiding direct access to them.
To buy crypto with Nebeus, you can follow these general steps:
- Create an Account: Start by creating an account on the Nebeus platform. Provide the necessary information, including your name, email address, and password. You may need to complete the required verification process, which may involve submitting identification documents to comply with Know Your Customer (KYC) regulations.
- Deposit Funds: Once your account is set up and verified, you'll need to deposit funds into your Nebeus account. Nebeus supports various payment methods, including bank transfers, credit/debit cards, and cryptocurrencies. Input your credit card details and follow the instructions provided to deposit funds into your Nebeus account.
- Select Cryptocurrency: After depositing funds, navigate to the Nebeus platform's buying or trading section. Choose the cryptocurrency you wish to purchase from the available options. Nebeus supports popular cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and 20+ others.
- Specify the Amount: Enter the amount of the chosen cryptocurrency that you want to buy. Nebeus usually provides real-time exchange rates, so you'll see the equivalent amount in your selected currency (e.g., USD, EUR).
- Review and Confirm: Double-check all the details, including the purchase amount and associated fees. Ensure that everything is accurate before proceeding. Read and accept any terms or agreements presented by Nebeus.
- Complete the Purchase: Once you confirm the purchase, Nebeus will execute the transaction, deducting the necessary funds from your account and providing you with the purchased cryptocurrency. The acquired crypto will be credited to your Nebeus wallet within the platform.
- Manage Your Cryptocurrency: After the purchase is completed, you can choose to keep your crypto in your Nebeus wallet or transfer it to an earning program to gain rewards on crypto, get a crypto-backed loan or more.
Buy crypto credit card. How do crypto-backed credit cards work?
Crypto-backed credit cards, also known as collateralized credit cards or crypto cards, offer a unique solution for individuals looking to access credit while utilizing their cryptocurrency holdings. These cards allow users to secure a line of credit by depositing cryptocurrency as collateral. This collateral serves as a guarantee for the credit extended to the user, providing them with the flexibility to make purchases or cash withdrawals within the approved credit limit.
The credit limit on a crypto-backed credit card is determined based on the value of the cryptocurrency collateral. Higher collateral values generally result in higher credit limits. Users can spend within the approved credit limit, similar to traditional credit cards, but the spending is not directly deducted from the cryptocurrency collateral. Regular repayments are required to settle the borrowed credit, often in fiat currency or cryptocurrency, depending on the card provider's policies.
Coming soon to Nebeus is a credit line and credit card backed by digital assets, allowing users to spend fiat without the need to take a loan and not sell their digital assets.
What banks let you buy crypto with a credit card in the UK?
The UK is quite crypto-friendly, depending on who you bank with. There are more than several options for would-be investors looking to make credit card purchases:
- Nebeus: Nebeus allows you to buy crypto with a debit or credit card and with Apple and Google Pay for a convenient and quick purchase.
- Revolut: Revolut's trading of stocks and shares allows dealing with exchanges and allows trading crypto through their app. However, it should be noted that you don't own the crypto - Revolut does.
- Monzo: Another progressive bank in Monzo claims to be a crypto-friendly bank and allows customers to use their accounts to buy and sell through crypto exchanges.
- Royal Bank of Scotland: The RBS is supportive of cryptocurrencies and allows buying and selling crypto with a debit or credit card. Access to some services and exchanges may be restricted, such as Faster Payment methods without verification.
- Nationwide: Nationwide allows customers to use their debit or credit cards to make payments to crypto exchanges and has systems in place to prevent suspicious or unusual payments.
- TSB: TSB generally have no problems in buying or selling on crypto platforms, and any issues can be resolved by splitting payments into smaller amounts or contacting customer services.
- Barclays: Barclays allows payments to and from crypto exchanges. Although, there have been some reports of refused payments and closed accounts.
Banks that might not let you purchase crypto with a credit card:
- Lloyds Banking Group: Lloyds blocked all credit card payments to crypto exchanges since 2018, and debit card payments may be flagged as fraud.
- HSBC: HSBC no longer supports deposits; debit and credit card payments can sometimes be blocked.
- Starling Bank: Starling has no policy preventing cryptocurrency exchange payments, but customers have reported frozen accounts in the past.
- Other Banks: Metrobank, Halifax, Santander, The Co-operative Bank
What banks let you buy crypto with a credit card in the US?
American banks have varying policies regarding purchasing cryptocurrencies with their credit cards. American Express permits such purchases but with certain restrictions on some exchanges.
Other banks like Chase, Capital One, and Citi also allow you to buy crypto with their credit cards - with the amount acting as a cash advance. Revolut is also available in the US.
Bank of America, Barclays, Discover, and Wells Fargo do not allow customers to buy cryptocurrencies with their credit cards.
What banks let you buy crypto with credit card in Europe?
In Europe, there are many crypto-friendly banks that act as crypto exchanges or allow their services to operate with crypto exchanges. Not all of them provide credit or debit cards, but most operate with an understanding of the risk of investment within crypto. Most if not all of these banks in Europe can purchase crypto with their credit and debit cards through Nebeus.
Nebeus is the banking alternative for Web3, so users can easily purchase crypto using different methods, including credit cards and debit cards. In addition to this, Nebeus Visa card* can be used to buy crypto as it is connected to your personal IBAN and has seamless transactions between your banking and crypto account.
In order to check if the bank account you use can purchase crypto with a credit card in Europe, it should be checked on the relevant crypto exchanges if your card supports 3D Secure payments. You can check this directly with your bank or through the crypto exchanges by adding the card, which can act as verification between you and your bank.
You can sign up for a Nebeus account to buy crypto with a credit card.
La inversión en criptoactivos no está regulada, puede no ser adecuada para inversores minoristas y se puede perder la totalidad del monto invertido.
*Your card is issued by Modulr Finance B.V. pursuant to a license by Visa Europe. Visa and the Visa brand mark are registered trademarks of Visa Europe.